after another. i suggested that under the net neutrality policy we approached what economists aspire to which is a market with very few barriers to entry and -- jenna: >> we have defacto today, have kind of a net neutrality policy that has been in place that been operating, maybe not formally but in some ways formally but also informally. >> i will agree with the sentiment if it is not broken don't fix it. we have had net neutrality policies for the last 20 years and it has been terrific. this is no time to jettison, jettison and turn turn to the f 2. c and jettison antitrust. >> that would be change. >> the change would be moving to antitrust. the fcc oversight has been terrific in terms of economic development and innovation. >> i also want to say that maybe why we have a letter from over 100 internet companies, from

large company startup services who, wrote a letter to the fcc last month arguing that the commission's rules should protect users and internet companies on both fixed and mobile platforms against blocking, discrimination and pay prioritization and, mr. chair, i ask for unanimous consent to submit this letter for the record. >> without objection. so ordered. >> so, that's, an example of folks feeling like we have a competitive environment today where they have been able to thrive and innovate and wanted to make sure we continue to maintain that. so, with that, mr. chair, i yield back. >> thank you very much. we'll now recognize mr. smith. >> thank you, mr. chairman. thank you for holding this hearing. i think it is important that we examine the importance of the antitrust laws. they can play in the discussion of the internet and particularly net neutrality debate. my first question is for

mr. mcdowell. how would additional regulation impact small and mid-sized internet providers? >> there is evidence in the record at the fcc during various rounds in '08 and 2010 and i think coming in now under of the current proceeding, wireless internet service providers, wisps we call them and others are very concerned about explicit evidence in the record, statements by owners staying that they have been questioned by their banks as what their future would look like, whether or not they could get loans from banks and buildout and continue to improve their networks and serve their customers. >> would these companies be similarly impacted by the application of the antitrust law? no, i don't think so. they wouldn't. part of the question is here creating a new body of law. by the way i disagree with the premise there has been defacto net neutrality by the government. there has been defacto net neutrality in the private sector to maximize freedom so you're

actually creating abundance and competition but not by the government. but in the case no is the answer to that question. >> okay. well in your view, do you believe the fcc is properly equipped to handle enforcement of improper conduct over the internet. >> and, what do you mean by improper conduct? >> just -- >> anticompetitive conduct? >> yes. so the courts have cabined in the fcc's authority here, in part because congress did not contemplate this i disagree with the d.c. circuit in the verizon case of section 706 gives the fcc authority to add more regulation. 706 is about the fcc reducing regulations to stimulate broadband infrastructure deployment. so i disagree. it was a 2-1 decision. judge silverman's dissent is very compelling in that regard. the fcc has very limited authority here and i think will fail again in court if it goes outside of the bounds of what

judge tatel was drawing. i disagree with. he is talking about commercially reasonable agreement. that is the something in the data roman context which worked so far. in any question to answer your question more succinctly i think the fcc has almost no authority in this space. >> thank you. professor wu, outside of the free speech concerns outlined in your testimony, do you believe the ftc would be effective at protecting consumer interests and pro-competitive behavior over the internet? >> i think the ftc would do some, would do some things very well. i admire, i admire the ftc. i think they're a good agency and i think they're well-equipped to deal with violations of the sherman act or of and other unfair methods of competition. but i don't think they have adequate scope to deal with the full scope of harms including non-economic harms that we might

see that arise from discriminatory practice that arise from internet service providers. i give example of political bias, regional bias, of localism concerns, diversity concerns. i think they do a good job of certain form of harm but i don't think their review encompasses all the harms we care about in the internet space. >> commissioner wright, would you want to answer that same question? >> the supreme court described the antitrust laws of the united states as the magna carta of free enterprise. the idea behind the antitrust laws that competition is what drives, not just lower price for a gallon of milk or increased output but increased quality, proliferation of content, variety and a number of things that have been described in this context as non-economic values. the fundamental idea of there are non-economic values the fundamental idea of the

antitrust laws that a belief that competition drives these things is the basis for having a strong antitrust enforcement and my view the evolution of antitrust laws attached and tethered to sound economics have given antitrust enforcement at ftc and other agencies a real strong intellectual, analytical basis for analyzing precisely this type of conduct, allowing the conduct that benefits consumers over which there is basically no real debate and preventing competitive harms. >> thank you, mr. chairman. i yield back. >> thank you very much. we'll now recognize the gentleman from rhode island, mr. cicilline. >> thank you, mr. chairman. thank you to our witnesses. i think we're all interested in preserving the internet as an open platform for innovation and for free expression and obviously as tool for and investment in economic growth. i do think it is very clear that

the ininternet play as very special role in free and open society as professor wu. the notion that the federal trade commission that has expertise in insuring competition in the sale of commodities and trade of widgets of goods and services may not be the best agency when we're talking about a very different entity, and that is the internet a vehicle, a platform for series of other important democratic values. the first question i have to you, commissioner wright, to follow up on congresswoman's delbene's point or question which i don't think you answered. you said vertical contraction arrangements between broad band providers panned content providers are beneficial for innovation and for consumers because they create certain efficiencies. tell me, tell my constituents, what benefits you believe would arise from those contractual

arrangements. >> okay. so to give an example. a broadband provider and a content provider can have an arrangement where they are going to jointly, through their contract, offer a service to some group of consumers. for example, we kang have the sale of a, excuse me a service, metropcs had this, this was a couple years ago where they were going to offer a service at a reduced price but because of concerns about congestion on the network, take off the use of video downloads. i think they had youtube off of it. they would offer a lower price. there was significant demand for that product t was at a lower price to a consumer group that maybe couldn't buy services that would have the sort of full-scale and be at a higher price. we have that sort of relationship. >> that relates to economic benefit. this is where i would like professor wu, for you to talk a little more about it. seems to me that analysis is helpful as it relates to a

strictly economic analysis. what's the danger with approaching the internet with that sort of narrow view and what, what are the values that are at stake here if we don't preserve vigorously an open, accessible internet? what are the implications here and around the world? >> i implications are serious. i think the united states would not longer be the leader of internet openness which is part of our foreign policy. the state department has spent a enormous amount of time trying to say to authoritarian regimes. you need to be like us, you need to be an open internet country. if we abandon open internest and rules for open internet and say we decided it is an economic issue that i think that sends a bad message. i also want to say most of the most valuable uses of the internet we'll are not commercial uses. for example, the one of the most

valuable uses of internet when extended families share pictures. parents send picture of their grandchildren to the grandparents. and that is, doesn't show up in an economic analysis commercial analysis. very hard to measure these kind of values. i'm very concerned things like families and things like just friends, totally non-commercial interactions will be kinds ever things that won't get properly factored into the analysis just focused on trade. federal trade commission or antitrust laws which are focused on things you can measure that have clear commercial value. >> professor wu, should we draw any infriends -- inference from the fact that the overwhelming number of technology companies as letter introduced by congressman delbene, over 100 technology companies are calling on the fcc to protect net neutrality as compared to the folks who are the service providers, sort of the smaller

group in the business of selling the products on the internet. >> right. >> should we draw any inference from the different positions -- we heard a lot of discussion how it will impede innovation and impede investment from entrepreneurs. seems as if there has been a very loud signal from innovators and entrepreneurs, that in fact it is critical to them and to the growth of this sector of our economy that there be open internet. >> i thoroughly agree with you. i will return again to the idea if it is not broken, don't fix it. what is being proposed moving away from net neutrality as overseen by fcc and towards untested antitrust method. we've seen very clearly the incredibly vibrant economy grown up on the internet and in fact has been enormously beneficial to cable and telephone companies, they want net neutrality protected using the fcc. why would we mess with that by experimenting with antitrust enforcement and is untested and

will have results we can't predict and as you earlier indicated doesn't protect some of the most important non-commercial values at stake. >> thank you very much. i yield back, mr. chairman. >> thank you very much. i think since we've been through the complete round of questionings we'll ask the witnesses if anybody else has any additional questions, within the next five days we submit them. would you be willing to, reply to those in writing? so without objection, all members will have five legislative days to submit additional written questions for witnesses or additional material for the records. that concludes today's hearing. thank y'all, very much. it was an informative and fun hearing.

>> a bill to reauthorize the commodities futures trading commission. the senate returns at 2:00 eastern. they have votes at 5:30 on four federal court district nominations. live coverage of the house on c-span and the senate live here on c-span2. at the white house president obama participates in an all move day summit looking for ways to help working families. the president is scheduled to deliver remarks at 1:40 eastern. that is live on c-span3. turning back to capitol hill, missouri senator claire mccaskill hold as several of roundtable discussions to combat rape and sexual assault on college campuses. participants include college police chiefs, prosecutors and sexual assault victims advocates. that is live 2 :30 eastern on

c-span3. irs commissioner john koskinen set to testify again this evening before the house oversight and government reform committee about his agency's record-keeping practices and a loss of unknown number of emails related to former irs official lois lerner. coverage begins 7:00 p.m. eastern here on c-span2. >> securities & exchange commission chair her morery jo white outlined, new stock market

rules aimed at transparency in the stock market and high speed trading. hosted by the economic club of new york. it is 45 minutes. >> if the people could please get seated. thank you. please get seated. making me feel like a party-pooper here. i'm bill dudley. i'm vice-chair of the economic club of new york and also president of the federal reserve bank of new york. i want to welcome everybody to the 438th meeting of the club in our 107th year. the economic club of new york is the nation's leading

non-partisan forum for economic policy speeches. more than 1,000 speakers have appeared before the club. this is establish ad very strong tradition of excellence. like to recognize 214 members of the centennial society who have contributed to insure a sound future for the club. and i would like to welcome the students here today from brooklyn college and law school, columbia university business school, and nyu law school, fordham and the new school. their attendance is made possible by our members. we're honored today to hear from mary jo white, chair of the securities & exchange commission. i for one am very happy to see she is at the fcc performing so ably and leading that institution. chair white arrived at the fcc -- sec in april last year, with decades of experience as a federal prosecutor and securities lawyer. as a u.s. attorney for the

southern district from 1993 to 2000 two, she specializes in prosecuting complex securities and financial institution fraud cases and international terrorism cases. after leaving her u.s. attorney post chair white became the chair of the litigation department at debo, voice and plimpton in new york. she earned her undergraduate degree, phi beta kappa from william and mary, her master's degree in psychology from the new school of social research and earned her law degree at columbia law school. chair white, the floor is yours. [applause] >> thank you, bill, very much for that very kind introduction. it truly is my honor to speak before the economic club of new york. i also want to acknowledge the presence of two of my esteemed, i guess former colleagues or at least the agency's former

colleagues. harvey pitt, the former chairman of the sec and former commissioner annette nazareth. great to have you here today. i also can't quite resist saying that whoever arranged for the yankees to sweep the toronto bluejays for my arrival i have will be eternally grateful. i'm really happy to be here on particular day. i may not be able to say that next time i'm here but i want to say it today. what i want to speak about is the current state of our securities markets, an issue i know is on a lot of people's minds and one that think is well-suited for, as a topic for the financial capital of the world, where we are now. the u.s. securities markets are the largest and most robust in the world and they are fundamental to the global economy. they transform the savings of investors, into capital for thousands of companies, add to nest eggs, send our children to college, turn american ingenuity into tomorrow's innovation,

finance critical public infrastructure and help transfer unwanted financial risks. the state and quality of our equity markets in particular have received a great deal of attention lately, with the discussion that actually has expanded well beyond those who regularly think and write about these markets, to include every day investors concerned about the investments they make and the savings that they depend on. i have been closely focused on these issues since i joined the sec about a year ago and i welcome the broader dialogue. two weeks ago, actually just a few blocks from here, i spoke about the sec's plan to strengthen our current equity market structure and make it more transparent. in addition to outlining a focused review of our own rules and targeted initiatives, i emphasized our commitment at the sec to comprehensively review and address core market

structure policy issues such as the overall fairness of trading in high speed markets, changes in the number and nature of trading venues and conflicts of interest at broker-dealers. today what i would like to do is continue and actually broaden that discussion about the these fundamental issues, focusing on actually the changing nature of one of the most basic of securities market funks, intermediation and at its simplest, intermediation means the services offered by market professionals to execute the buy and sell orders of investors. services offered by brokers, dealers and exchanges. just as in other segments of the economy powerful pores forces of competition and technology can transform meese services and they have done so. a central challenge for us at the sec is to adopt regulatory approaches that insure intermediaries harness the forces of technology and

competition to better serve the needs of investors in each of the markets we oversee. not just in equities but also in fixed income and derivatives. now to understand this challenge, i want to talk first just a bit about why competition and technology are so important to how we address market structure issues generally and the role of intermediation in particular. i will then turn actually to contrasting markets, to illustrate the complexity of our task as regulators as we and when we grapple with these forces. namely how the equity and fixed income markets have been affected or have not been affected by competition and technology. you know, just like the u.s., macro economy all of the securities markets operate within a structure of rules, technology, market practices and other constraints that establish the boundaries for interactions between buyers and sellers. it's important to recognize that this structure does not just

mean regulation. but also the much more complex interaction among regulation and other factors like competition and technology. every incremental change in these interactions can produce significant, sometimes, unintended economic consequences that may actually not become evident for a period of years or even decades. so this dynamic reality means that we should not be chasing regulatory solutions that fix the market structure for once and for all. our markets are not broken and they are not static n that sense our work on market structure is never finished. the speed with witch technology and markets change makes that impossible. instead we must always be focused on what in our market structure can be improved for the benefit of investors and companies. and taking this approach actually requires us to expand our perspective, both in terms

of time, considering developments well past the last few years and in terms of markets, understanding that the differences among markets rather than simply excusing them as an inevitable consequence of different products and structures. you know, if we stand actually too close to the particular problems in a particular market at a particular time we may well fail to fully understand the broader forces that are at work and the regulatory choices that are available. consider the connection that some have asserted between the rise of high frequency trading and implementation of regulation nms in 2007. regulation nms as most of you know is the commission's most recent comprehensive set of rules designed to carry out our statutory mandate to establish a national market system for equities. regulation nms includes a so-called trade through provision that generally

prohibits trades at prices inferior to the best quoted prices. some have argued that this provision facilitated the fragmentation of volume among many new trading venues, enabling high frequency traders to flourish by exploiting the fastest connection among these venues. given the current prevalence of high frequency traders in our equities markets, some put the number by the way at about 50% of daily volume, one might reasonably ask indeed, whether regulation nms did in fact change the rules of the game in favor of speed? as a regulator, assessing our markets however we have can not rely simply on the temporal juxtaposition of regulations nms and high frequency trading. the issues and forces at play are more complex. this can be seen actually in the data from other markets, both in the united states and around the world. many of which are also now

characterized by high levels of high frequency trading, but none of i with have their own regulation nms. in this light the rise of high frequency trading emerges as a more complicated story than simply the unintended consequences of regulation. take for example, the e-mini s&p 500 futures contract which is one of the most actively traded products in the united states which is not subject to regulation nms or sec oversight. unlike trading in the equity markets which is spread among multiple exchanges and off the exchanged venues all trading in e-mini is centralized on a single market, the chicago mercantile exchange. the cme does not use the pricing structure, you may have heard of maker taker model used by most u.s. equity exchanges. the market structure of the e mini is not like the market structure of u.s. equities.

imperial studies indicate like the high frequency trading firms account for more than 50% of e-mini trading. comparisons like this rather basic one demonstrate the need for really a wider lens in a evaluating market structure issues and proposals for changes. that wider lens immediately and inevitably brings competition and technology into view. perhaps nowhere has the impact of the forces of technology and competition been more profound than in how intermediaries have changed and intermediation has changed over the last 20 years in equities and listed options. at least since 1934 when congress first mandated regulation of trading in the u.s. securities markets intermediation has been defined by respective functions of exchanges, brokers and dealers. ex changes provide facilities that bring together purchasers and sellers of securities, generally for a specified fee. brokers as we all know are

agents. they engage in the business of affecting transactions for securities for the account of others, generally for an explicit commission. dealers are principals. they engage in the business of buying and selling securities for their own account and generally are compensated implicitly through trading profits. some of these dealers are high frequency traders. now to complicate things a bit further, the neat lines that congress drew in 1934 have not resulted in models of intermediation that are clear-cut or uniform across securities markets. the most obviously the functions of broker and dealer have often been combined. there is a reason why we call them broker-dealers. the conflict between investors interests and intermediaries interests that can be created by this dual role has been a source frankly of serious concern since the sec was created. another type of dual role in conflict has arisen when exchanges and dealers have acted

collectively to control competition among dealers in setting their prices as occurred in the 1990s. in addition to conflicts of interest, intermediation when it is unnecessary, infish enor uncompetitive can also unnecessarily increase the costs to investors. the explicit fees charged by exchanges and brokers for example, may be excessive in the absence of effective competition. serious concerns have also been raised about excessive intermediation by dealers. so given the importance of intermediation in our markets, and the related persistent concerns of conflicts of interest, and investors costs, we must continue toly rethink the way we look at intermediation. particularly for a given market we must ask whether intermediation has appropriately harnessed competition and technology in the service of investors? are the benefits being realized by investors?

are there unintended consequences that are adversely affecting investors? is regulation appropriately tailored to the competitive dynamics and technological developments of the market? you know, stepping back to look at the contrast between actually the equity and fixed income markets may actually help us better understand these questions and the inherent complexities of the regulatory decisions of the sec. in the u.s. equity markets competition and technology have had a profound effect, for over many years. generating enormous benefits for investors and issuers. equity markets today are host to a diverse set of ex changes and alternative trading systems that match buyers and sellers. dealer intermediation is substantial in both sometimes of matching venues. but, many orders are not intermediated on these matches venues. they are executed by broker-dealers before they ever reach such a venue.

exchange trading represents more than 35% of equity volume compared to just 25% five years ago. and majority of this volume actually reflects broker-dealers executing directly the orders of both retail and institutional traders. . . >> in 1975 when congress amended te

exchange act to direct the commission to facilitate the creation of a national market system. and it continued into the adoption of regulation nms with fears that competition, sparked by the new rules, would be limited to the new york stock exchange and nasdaq. well, we're now living in a much different world where many are questioning whether the pendulum has swung too far, and we have too many venues creating unnecessary complexity and costs for investors. over the last 40 years, the sec's worked hard to further the statutory objectives of the national market system. which include the efficient execution of transactions, price transparency, competition, best execution and an opportunity for investors to meet directly. but as previous commissions have noted repeatedly, these objectives are not entirely aligned. in particular, the goal of competition among trading venues can lead to what we generally all call fragmentation where

order toes may be spread among -- orders may be spread among competing venues. it may attract for investor orders to meet directly by creating opportunities for excessive intermediatuation. now, the sec has sought paths no balance these objectives in advancing the interests of investors. no one, however, could credibly claim that this task an easy one. for example, one serious challenge arose in the 1990s in the market structure for nasdaq-listed stocks. certain dealers on nasdaq had taken action to discourage competition, unquote, and to maintain rider spreads which helped preserve compensation for the dealers as intermediaries providing liquidity. institutional investors responded to the increases in their trading costs caused by the wider spreads, finding ways to directly negotiate better prices with different dealers and take advantage of an alternative trading venue known as an ecn, an electronic

communication network. while both institutional investors and dealers traded on the ecn, retail investors had no access to the more favorable prices quoted on the ecn. but brokers that handled retail orders directly benefited from the artificially wide spreads created by the collusive scheme because they either traded with their customers directly as dealers or sold their order flow for a fee to other dealers. now, is the sec addressed these issues actually in 1996 by requiring the nasdaq quoting system be opened up to prices of all participants, not just dealers, and by emphasizing that brokers that handled retail order flow were required to consider opportunities for price improvement on the displayed prices. these steps served to empower the ecns, unleashing competitive forces that led to a major shift in trading volume from the nasdaq dealers to the ecns. by 2004 multiple competing

ecns and nasdaq matching systems shared approximately 70% of volume. trading on these matching systems was highly autohated. ec ns disseminated market data directly to subscribers as well as to the lick. e.ecns also used the pricing structure used today. finally, the speed and electronic nature proved attractive to proprietary firms that engaged in be high volume algorithmic strategies. before long these firms became known as high frequency traders. now, if these key features of the equity market structure in 2004 that i've been talking about sound familiar to you, they should. though it originated well before regulation nms was implemented in 2007, that structure is very similar to what we have today, and it was created through intense competition and tremendous technological changes, not just sec actions. and we are addressing a number

of fundamental issues in our comprehensive review of equity market structure. but as we examine those issues through our wider lenses, this thumbnail history, i suggest, has two lessons for our approach. first, even if it were a desired objective, the impact of technology and competition on intermediatuation in our modern equity market structure cannot be undone by and through minor regulatory surgery. it is the culmination of over a quarter century of evolution, much of which has benefited investors. second, given the pace of the technological change and intensity of competition in the equities markets, we must always focus on insuring that our rules are keeping pace. if they do not, as they did not with advent of electronic trading, our obligation to insure that our markets continue to serve investors and companies will be compromised.

so with our expanded regulatory lens that i've been talking about, relate now just -- let me now just turn very briefly to consider the fixed income markets where the nature of intermediatuation has changed actually relatively little over the the years. it's important to remember that while almost 7,000 issuers currently have $27.8 trillion of securities trading on our equities exchanges, there are also more than 40,000 corporate bond issues outstanding, totaling approximately $11.3 trillion in principal amount and more than one million municipal bond issues outstanding representing about $3.7 trillion inial amount. now, trading in these massive fixed income markets, however, has really remained highly decentralized. occurring primarily through dealers where costs offer into mediation are much more difficult to measure than in other, more transparent venues. and while transaction prices for

both corporate and municipal bonds are now available to investors shortly after the trade occurs, the amount of pricing information available before a trade, builds and offers -- bids and offers -- is certainly not widely available to the investing public. here in contrast to the equity markets where the concern is perhaps whether technology and competition have taken us too far, one might instead ask for the fixed income markets, whether the transformative powers of these forces has been allowed to operate to the extent it should to benefit investors. now, it's striking that the dramatic technological advances that have transformed the equity markets really over the past decade have had only a modest impact on the trading of fixed income securities. while today there are a number of electronic systems that facilitate trading in fixed income securities, they tend to be inventory based, providing information primarily on the

bonds their participating dealers would like to sell. in addition, information about the trading interests reflected on these systems often is restricted to participating dealers and select customers. so although new technologies are gradually being incorporated into the trading of fixed income securities, producing efficiencies and some pretrade pricing information, it appears they are primarily being used to support the traditional dealer model. so i'm, therefore, concerned that in the fixed income markets technology is being leveraged simply to make the old method of trading more efficient for market interimmediate yeas -- intermediaries. lower search costs and greater price competition, especially for retail investors, is not being realized. to partially address these concerns and to help assure that investors receive the best

prices reasonably available, i've asked finra and the nsrb to prioritize their instructive, ongoing work on two important, but in my opinion, relatively achievable initiatives to improve the quality and transparency of the prices received by investors. first, to insure that brokers are subject to meaningful obligations to achievement and the best executions for investors in both corporate and municipal bond transactions, we will be working closely with the msrb in the coming months as they finalize a robust best execution rule for the municipal securities market. and with finra and the msrb as they work together to provide practical guidance on how brokers might effectively best achieve best execution. the development of a workable, best execution rule for pote the corporate and i municipal bond markets is vital for enhancing price competition. second, to help investors better understand the cost of their fixed income transactions, we

are work with finra and the msrb in their efforts to develop rules by the end of year regarding disclosure of mark-ups in risk less principal transactions for both corporate and municipal bonds. these transactions occur when dealers buy and sell a fixed income security at substantially the same price and time to fill two customer orders. mark-up, the dealer's compensation for these transactions, can be readily identified because they are based on different prices on the two contemporaneous transactions which already must be reported promptly to finra and the msrb for public posting after the trade. now, this information should help customers assess the reasonableness of their dealer's compensation and should deter overcharging. the need for mark-up disclosure is increasingly important as riskless principal transactions become more common in the fixed income markets. and the importance of mark-up disclosure is especially pronounced in the current low

yield environment where the amount of an intermediary's compensation can have a measurable impact on the yield that an investor receives. more broadly, we must take steps to insure the benefits of technological advances are realized by all investors in the fixed income markets. according toly, i have asked the staff to focus on a regulatory initiative to enhance the public availability of pretrade pricing information in the fixed income markets, particularly with respect to smaller retail-size orders. this initiative, by the way, referenced in the commission's 2012 report would require the public dissemination of the best prices generated by alternative trading systems and other electronic dealer networks in the corporate and municipal bond markets. this potentially transformative change would broaden the access to pricing information that today is only available to select parties. i'm acutely aware as we go about this of the need to carefully

calibrate any regulatory proposal in this area to best achieve our regulatory goals and minimize unintended consequences. we'll engage in thorough discussions with market participants as well as careful staff analysis of the pricing data already available to assess how best to achieve our regulatory object is. but properly -- objectives. rules providing for transparency have the potential to transform the fixed income markets by promoting price competition, improving market efficiency and facilitating best execution. so the overall goal is to fully understand the role of technology and competition in today's markets and to help these powerful forces work for investors in every securities market including in the fixed income markets. and i think only with this broader perspective, one guided by the daily experience of investors, will we insure that our securities market structure

continues to support a strong, growing global economy. and at the scc, we are -- sec, we are fully and continuously committed to that objective. thank you very much for listening. [applause] >> thank you very much, chair white, for those very relevant, clear and insightful comments. as our, as is our custom, two members have been selected to question the chair, floyd norris who's the chief financial correspondent of "the new york times" over here, and glenn hutchins, the cofounder of silver lake and a member of the economic club board sitting over here. also if you have a question, you can e-mail it to questions@ec objection nclub ny.org, econ econclubny.org. floyd, you are the first

questioner. please. >> thank you, chair white, for an interesting speech. the commission has proposed rules on money market funds that the president and the federal reserve banks argue are too weak and could worsen the situation if there were another financial crisis. at the same time, money market fund industry would rather the commission do nothing. [laughter] what is your views on what needs to be done, and do you think the commission will be able to get a majority vote to do anything? >> i say they both lose and yes? the answer is we are currently as a commission quite actively engaged in finalizing the money market fund rules. and i expect in the near term that that adoption will occur. clearly in the process of doing that, we've taken very seriously all of the comments we've received including the concerns expressed, i think by among others, some members of federal reserve banks, maybe all the federal reserve banks.

but in terms of whether the tees and gates aspects of our alternative proposals in the proposal might run a risk of preemptive runs. and so we've certainly taken that in. our economists have analyzed that, and we're, you know, quite focused, you know, on those issues, and, frankly, all the other issues raised during the comment period. but i do have a good confidence level that we will be proceeding in the very near term with the adoption of a very robust rule. >> chairman white, thank thank . you've talked about an ambitious agenda. i think today if i got you right a comprehensive review of equity market structure. talked in the past about looking into high frequency trading, dark pools, payment forward flow which you mentioned today, and today you also brought up the fixed income markets. you have a reputation not for talk despite your great speech today, but for action. >> right. >> and market participants here

are wondering how you'll prioritize the items on your agenda. over what time frame and in what sequence can they expect to see you take action? >> well, there are, as you know, many competing, you know, priorities, very important ones the commission has before it, actually including the completion of the mandated rule makings that the sec received under the dodd-frank act and the jobs act, and they are proceeding. hundred market rule fund making is not a mandated rulemaking but, obviously, a very high priority. i will say this about the market structure initiatives, i mean, this is a really across the markets set of issues that i focused on, actually, before i came to the sec and made one of my immediate priorities for us to come thoroughly to grips with those in a data-driven, disciplined way, but nevertheless, intensively. i think we also have maybe

rarely, but i think we have all five of our commissioners who have spoken publicly about how high a priority the range of market structure issue is. now, that includes some things we didn't talk about today too. for example, we have a proposed rule sci that deals with requiring enhanced safeguards over technological systems of the exchanges and the large alternative trading systems, you know, to really insure that the technology that connects our very interconnected market is as robust as it can be, redundant where it needs to be, and so that is a very high priority for us as well. i mean, there's no question you can't do everything at once, but, you know, i think -- i hope you're right in your assessment of me from my past. i mean, i'm very focused on being able to accomplish everything we've spoken of today and things i've added to the list, you know, within the next, certainly the next year or two. l now, some of them will be much sooner than others, obviously, because you have to, you know, proceed in a sequence.

money market funds, i mentioned, is a very near term expectation of moving forward. >> madam chair, the sec often grants waivers to banks and brokerage firms that run afoul of your rules or criminal laws. free the banks from provisions of the law that would otherwise either deny them privileges or perhaps remove them from certain parts of their business, could you discuss your general views on such waivers and whether you think the commission should announce whatever waivers are granted at the same time they disclose a settlement with bank or brokage firm? >> yeah. two main questions there. the first is that either by statute or regulation where there are certain automatic disqualifications occur, it doesn't apply just to banks, but whomever. there's also a provision for waivers and standards that are

set forth with respect to those waivers. they tend to arise. they're not enforcement remedies, but they tend to arise in connection, you know, with enforcement actions either by us or by some other agency. and then the focus is really on per the standards of the statute or per the standards of the regulation should the fact of that enforcement action also mean that a waiver should not be granted if it's -- granted if it's asked for to to permit the particular company to engage in some other aspects of its business. i think it's very important, i think we do regard the waiver process when a waiver is requested. we need to be very robust in our review of those, very faithful to those standards, and i think we are. i mean, a very case-by-case to some degree -- although we do have policy statements, you know, to guide both the public, i think, and those who might apply for those waivers and make those decisions, you know, per those standards. and i think we do do that.

now, in terms of the timing and the transparency, i though you, floyd, i know you've raised that in one of your columns as well. first, if a waiver is granted, it's posted as soon as it's granted on our web site. now, because of the nature -- again, not enforcement remedies. so you'll often have our division of investment management at least as the line group of staff that's analyzing this. the commission does some of these themself, some of it's by delegated authority. the timing isn't always the same. so you may have an enforcement action that's resolved, requests for waiver may come in later even if it's associated with our enforcement action. if it's some other agency's enforcement action, obviously, there's not an enforcement action to attach it to at the same time. one of the things i've done, though, is to try to make sure that it's to the extent one can that that information's available at the same time when we do have an enforcement action pending. >> so a number of us in this room are directors of public

companies, and we have observed over the years how the role of proxy advisers has grown. at the same time, standard setting for all of us is opaque, it's inaccessible, seems to have a fair amount of conflict associated with it and reminds us of issues your predecessors had to deal with first at accounting firms and later rating agencies. how do you view this issue, and what do you think the role of the sec is in connection with it? >> the issues that have been raised, we actually had a round table in this december, i thought it was a constructive round table. representatives from the proxy adviser firms were there, issuers were there. since then really under my direction the staff has been focused on what next steps the sec should take in this space. there's also sort of going on both before that round table and afterwards as you know a lot of

dialogue between the companies, the investors and the proxy advisory firms about how the process might be improved by those discussions. and having those issues brought to bear. proxy advisory firms are enormously important be, but there also have been issues that have been raised, you know, that need attention. and so i'm currently sort of reviewing the output from the staff on that. >> madam chairman, some advocates hope you're going to come through for them and at least allow some american companies to use international standards rather than u.s. gap. can you talk about your attitudes on that? >> yeah. yes, i can a little bit of activity in that space recently too, right? i think you did a column on that as well -- [laughter] but passing that, what i've said about that, floyd, and i'll

repeat it here again, i think -- the commission last spoke on that issue as a commission in 2010. as to whether -- as most of you, probably all of you know, i mean, the foreign private issuers can now use ifrs and do not have to reconcile to u.s. gap. so the united states is a great user and investor and reviewer of ifrs in that context. the remaining, obviously, big issue is whether and, if so, how and to what extent ifrs is to be, might be extended to domestic issuers. that's really the issue that's there. what i've said is it's a high priority for me, and it is, to the get the commission in a position to speak further on this issue in the very near term. i can't tell you what that statement will be at this point in time, but i think it's a very high priority for the commission to give, make a statement and

provide a clearer explanation as to exactly where the commission is. >> one of the sec's most important, and of course, confidential laws is through enforcement. in fact, the sec's one of the few agencies with independent litigating authority. at least one federal judge has questioned in the past how the sec has used that authority. although the second district -- >> did you want to repeat that last part? [laughter] >> no, the second circuit has recently disagreed. [laughter] okay, great. you bring a lot of high-level enforcement experience to your job as chairman. can you share with us the principles and priorities you intend to apply to your enforcement role? >> yeah, i mean, i guess i'd say generally, first, i think it's

enormously important for the sec, all law enforcement agencies, but the sec to be a very strong, credible enforcer of the federal securities laws. and i think i use, these always come back to haunt you a little bit, but i think at my confirmation bold and unrelenting, and i mean that. fairly and based on evidence. but it really is important to not only punish the wrong doers that are before you as the result of an investigation and enforcement action, but to send a very strong message of deterrence. one of the reasons that i changed, actually, the settlement protocol from a pretty much universal unless there was a parallel criminal action, no admit, no deny to requiring admissions in certain cases where i thought that or we think that there's a particular need for public accountability. we've set forth some parameters. it's clearly an evolving protocol. we've done, i think, about ten

very significant cases so far in that protocol, there clearly are going to be more because i think that public accountability's both important to the strength of the message of deterrence and for the credibility of a strong, you know, law enforcement agency. the other thing that we've tried to do also is to look kind of across the many regulations that we have, and they're very important ones. and if there is a situation where there really is noncompliance, kind of a pattern of noncompliance -- even if it isn't the biggest fraud which we'll never ignore, obviously, they're always prioritized -- that we really bring, where necessary and appropriate, enforcement on those to send that message that these regulations are there for a reason, to protect investors in the market, and you should, you know, conform with those. we're trying to be -- we can't be everywhere, we have limited resources, obviously. but really try to -- i came into a very strong enforcement program at the sec. some people always want more, but if you look at the sec's record on the financial crisis

cases, very impressive. very impressive. $3 billion, you know, basically in disgorgement and civil penalties ordered to be returned to harmed investors, i think $170, approximately 170 entities and individuals charged including about 70, you know, ceos and other senior executives. that's a very strong record. it needs to be a very strong record. i mean, obviously, there are complaints about why isn't there more, there always will be. so i think it's, you know, bottom line got a full stop. it's enormously important, and i've tried to add value to it, but the sec's enforcement program be as strong as possible. >> you spoke of putting in new rules on the bond market to increase disclosure on trading. i suspect the wall street firms will be worried about that as it's removing a substantial part of their profits. i'm just wondering, do you think

that your, the commission's job is at all to try to assure that these firms have a chance to be profitable? [laughter] >> what a question. [laughter] all of our rulemaking, i mean, we have a familiar tripartheid and, frankly, broader than that now, to protect investors and facilitate capital formation when we do any rulemaking. usually by law, but certainly by policy, we balance what we're trying to accomplish for the benefit of investors with market impacts. we do very careful legal and economic analysis on all of our rules. we take into account, you know, all those factors, all those arguments that get made and try to fulfill our regulatory objectives as i sort of outlined in the speech. but also take account of doing it in the most cost effective way that we can. clearly, regulation has costs associated with it, and that's a

necessary part of it. >> i have a question from the floor about argentina. [laughter] what is your view on the potential impact for foreign issuers in the u.s. market, and why the supreme court decision on argentinean debt? >> i actually have a meeting on that on monday, so i don't want to give an opinion here today. obviously, i have an opinion, have studied it. floyd, i think you're prolific, you have a column on this as well which i've also read -- [laughter] very good issues raised with respect to that, but with stay tuned, i guess, okay? >> so i'll ask another one. [laughter] >> okay. i knew that was too easy, right? >> yeah, right. the sec has successfully settled a number of cases in some cases contributing to the financial crisis. can you please share with us what steps the sec is taking to

get those funds to the parties that suffered economic harm as a result of the actions that led to the settlement? >> this is actually receiving quite a bit of my personal attention because it takes longer than anybody wants to in most of these situations to get monies returned, so we're doing a number of what i would call enhancements to try to, you know, speed up that process. you know, it is a very -- i mean, for example, last year we received orders to return $3.4 billion because of our fair fund mechanism, you know, that's all returnable if collected to harmed investors. i think we've so far collected about $2 billion of that, so we have both the collection and sometimes we get the money, obviously, anytime we can up front and then return it as promptly as we can. so, by the way, compared to that $3.4 billion in orders of return, our budget is $1.3 billion. so, you know, we need a bigger budget too, but we're really

focusing on trying to streamline that process as much as we can. both the collection and the return end. you obviously have to, you know, have the claims vetted, you know, for being bona fide claims, but anything we can do to sort of speed that up at both ends we're trying to do. good? thank you. >> thank you. prison. [applause] >> i think we can say asked and answered. [laughter] thank you, floyd and glenn and chair white. the next meeting of the club will be next tuesday, june 24th, for breakfast at the hyatt with our members and my colleague, charles plosser, the ceo of the federal reserve bank of philadelphia. thank you all for coming and enjoy your lunch. [applause] >> both chambers of congress returned today following work on a series of bills, the house

resumes work on a bill to reauthorize the commodity futures trading commission through 2018. the senate returns at two eastern with votes at 5:30 on four district court nominations. later this week senators take up a bipartisan measure to help train and ais zest people looking for work -- assist people looking for work. watch the senate live here on c-span2. the hill newspaper p reporting business groups are stepping up their efforts to urge congress to reauthorize the export-import bank before its charter expires on september 30th. advocates, including the chamber of commerce and national association of manufacturers, have argued the elimination of the bank would leave thousands of u.s. exporters without an avenue to sell their products overseas. also reporting 42 house republicans have signed a letter addressed to speaker boehner calling for reauthorization. this comes after incoming majority leader kevin mccarthy

said this weekend that the bank's charter should expire. also on capitol hill, missouri senator claire mccaskill holds a discussion on ways to combat rape and sexual assaults on college campuses with college police chiefs and victims advocates at 2:30 eastern on c-span3. and we invite you to share your thoughts on facebook and twitter using the hashtag c-span chat. and irs commissioner john koskinen set to testify again this evening before the hours oversight and d house oversight and government reform committee. live coverage begins at 7 p.m. eastern here on c-span2. a discussion now on u.s. economic growth with deputy treasury secretary and former federal reserve board member sara bloom raskin. -- sarah bloom raskin. she addressed questions about tax policy, cybersecurity and

the ongoing economic coifer. it's 30 minutes -- recovery. it's 30 minutes. >> thank you, secretary raskin, for joining us. i'm used to calling you governor raskin as a fed governor, but you're holding a new title. so let's talk, start out talking about the economy. we have had very mixed signals so far this year. the economy contracted in the fist quarter, looks like it's picking up now. job growth seems strong, but the housing market seems -- you have the view as having billion at the fed and what's your view on how this recovery's playing out? >> first of all, very happy to be here, and i'm looking forward to this conversation and taking questions afterwards. the economy is definitely doing better. we're seeing indicators of lower

unemployment, better growth overall, inflation numbers moved up a little pit but still at the 2% fed target. things really looking, looking good. there is an upside, i think, for the economy. we're also seeing some things that i think bear further monitoring and that make us ask whether, in fact, the economy's recovery is a broad-based one. so, for example, the unemployment numbers, while lower, still are characterized by labor markets that haven't shown a complete and total recovery. so we see long-term unemployment, for example, is stilling with quite high -- still being white high. it's still coming down somewhat, but it is still much higher than we would imagine it to be at this stage in the recovery. we're seeing low household formation. not clear whether the housing

sector is participating in the growth as well as other sectors are, so i think the housing sector is something to, that bears continuous watching. i think from a financial stability perfect spective we're seeing -- perspective we're seeing banks much better capitalized than they were, obviously, early on prior to the crisis and immediately after the crisis. but, you know, again still wondering as to where further risks may lurk and interested in looking -- at making sure the financial stability of our economy is promoting economic growth. >> so i want to come back to some of those issues, but on the growth question, the fed has been predicting for four or five years now 3% growth, and we keep getting 2% growth. can you say with any conviction right now that we're going to,

that the year ahead or two years ahead we're going to get anything faster than what we have gotten in the last four years? >> my own view is probably, no, i wouldn't say any of these numbers can be given with any conviction. i mean, this exercise of doing projections is, you know, like staring into the abyss. i mean, it is really a very difficult exercise, making projections of any sort. one thing that i do feel fairly good about is that we're heading in the right direction. i mean, the growth is sustainable, it's moving in a direction that we would like to see it move in. we're not at all, you know, at the teetering point near a recession or recessionary fears, and that's all good. we would like to see, i think, a broader based economic recovery -- >> but not a lot of conviction that it's picking up. >> well, no, i think it is picking up. whether it's going to move into double digits or even the high single digits, i wouldn't go

that far. >> okay. so let's talk a little bit about tax policy. we've been reporting the last couple of days about a deal between medtronic and covidien, something called, something that's known as an inversion deal. an american company looking to buy an offshore company because the tax rate is lower offshore. how do you view deals like that? are those okay? >> well, you know, really deals are deals, and they can be done. i think this one in particular in connection with some others that have occurred as well indicate that something is probably wrong with our tax system. i think that it's really unfortunate that the, sort of the amount of earnings that exist overseas have not been able to be repatriated in a way that would work for our country's economic growth. so, you know, i think this is a signal that some kind of business tax reform should, you

know, should be taken quite seriously. >> well, so what's the solution, and what are the prospects of achieving that? >> so i guess in terms of the solution, you know, i'd like to see business tax reform plan that essentially lowers the corporate tax rate but sort of spreads the base out so we, essentially, remove a lot of the loopholes and deductions and things that essentially take people out of, businesses out of the base, but we are able to lower the base. and, you know, i think that there have been some good proposals. i think the administration put out a, you know, a good proposal in 2012 that was followed by some really interesting work that congressman camp did on the house side, baucus and hatch did some good work on the senate side. and, you know, there is some overlap in these proposals, and and i'd like to see some kind of work in terms of addressing the

places of overlap and really see if a consensus can be forged. >> so we're talking about conviction. what's your conviction that something like that can happen in this environment? >> well, it's hard. it's a very, very challenging environment, and so i can't make any promises in terms of how that would work out, but i'm just saying that there are areas, i think, of overlap, there are areas that people could start to work on, and i think deals like the deal we're seeing are signals, in essence, that reform is probably warranted. >> in the absence of reform, do you expect to see more inversion deals like this? and are they acceptable to the united states government, that american companies are going offshore in an effort to lower their tax base? >> yeah. a lot of these don't require regulatory approval, so they can move forward if their shareholders approve of them. i think we are going to see more of them with the current, you

know, very complicated tax system that we have and the ability to maneuver through that tax system is going to provide opportunities for doing inversion deals and others. >> so we had a story in today's paper looking at individuals, renouncing their united states citizenship. i don't know if you had a chance to see it. in response to a u.s. crackdown on offshore individual tax havens, what's your read on that, when americans are renouncing their citizenship to finish this response to the government crackdown on -- [inaudible] >> so, in essence, there are going to be behaviors that are affected by our tax system, be it the individual tax code or the, you know, corporate and business tax code. and behaviors are molded, they're incentivized by provisions in our tax system, and provisions have to be looked

at carefully when they're crafted and when they're reviewed to determine what the behaviors are that are going to, essentially, get incentivized or disincentivized. and i guess this piece is testament to the fact that some people are viewing the tax code as being one that they, you know, they would like to, you know, they prefer one from another regime. and this goes actually to some issues regarding harmonization of tax codes in regimes because, obviously, we want to create a tax code that doesn't create particular incentives to locate or, you know, set up transactions in other regimes. >> so i want to shift the conversation to student debt which is a subject that i know matters to you. the subject of this panel is the outlook for economic growth. any economist will tell you that a key to growth is the education of the work force. we seem to face a conundrum right now that education is the

key to advancement for the work force, and it's getting more and more expensive. you spend a lot of time looking at student debt. what's your assessment of how big this problem is, the size of student debt and the effect that it's having on young americans? >> so, jon, i, you know, i think i probably, i can try to give an assessment. i really have more questions than i have answers at this point. you are right, this is a huge and growing set of balances on our country's balance sheet. we have about $1.1 trillion of outstanding student loan balances now with about 40 million borrowers. those levels, while high, you know, do represent a very sound, i would argue, investment in our country's work force, in the people who live here. education is one that is

considered a fantastic investment in human capital. so there the perspective of looking -- from the per perspece of looking at this growing balance, i mean, one question i have is the extent to which these balances are being associated with higher levels of delinquency, higher levels of default which are significant from the perspective of presenting headwinds to economic growth. so you think about, for example, we talked about, you know, low household formation. and we do have low household formation now. query as to whether this low household formation is somehow a function of people paying off student debt. if you come out of school and you have a huge student debt set of payments to make, query as to whether you're bicycle to be in the mood or have the financial ability to go out and, you know, get married, buy a house, to things that, essentially, are also very strong, you know,

propellants of economic growth. so there are those concerns and then, you know, just from the thurm of delinquencies and defaults. again, if those delinquencies and defaults are unnecessary, if they've been triggered for reasons of, you know, sort of poor communication, people not knowing that there are a lot of income-based repayment plans that are available to them that actually help them cap the amount of payment they make went they repay their student loans, question is whether the default numbers and deliberation again key -- clip again is city numbers are reflective of an ability to pay. we want performing loans on our country's balance sheets, not nonperforming loans. >> now, the white house expanded some of these income-based repayment plans just earlier, early this week. i want today ask you, the government is the dominant player in this student loan market right now. are there any lessons to be

learned -- this is a loaded question -- about the experiences that we've had in the housing market with fannie mae and freddie mac as the dominant guarantors of housing debt? as it relates to student debt. we talked about incentives before. are the government guarantees of student loans having incentive effects that need to be thought through? >> that's a really interesting question because, of course, when you extend a student loan, when you do underwriting for a student loan, it is something -- it's a different exercise than underwriting for a mortgage, say. for one reason, you know, students are going to come out of school presumably, and they're not going to be at the peak of their earning capacity. they're going to sort of amp ramp up there, presumably, gradually, but they're not going to be able to be in a position where they do a massive payoff of the debt immediately. so the underwriting and

repayment patterns are going to be different. but i think, you know, i think you're on to something from the perspective of the servicing lessons because if you think back to the financial crisis and the role that mortgage servicing played in sort of the whatser or base of the -- exacerbation of the crisis, i think you see some really interesting similarities that are also, raise a lot of questions. but, you know, the servicing piece in particular on the mortgage side was one that was really not well suited for a crisis situation. so we learned in the housing context with a number of foreclosures that, you know, servicing is not -- it really had to be a high-touch, sort of me nod call the exercise that you had to go through borrower

by borrower. and the servicing model wasn't at all equipped -- >> how does that relate to student loan -- >> well, the student loans we're starting to see similar kind of servicing issues. and, again, is it a servicing model that isn't particularly well equipped for the number of student loan borrowers we now have? so i think these are interesting similarities and ones that we should also explore. >> so you've done a lot of work also on cybersecurity. i believe? >> well, i haven't done a lot of it -- >> you've been looking at it particularly as it relates to the financial is sector. what are the cfos in this room needing to know about what they need to do to protect themselves against cybersecurity threats? >> well, for one, the risk of a cyber threat is actually growing very quickly. as entry points and

vulnerabilities sort of to have ligate in our -- profligate in our system. so there are really many more vulnerabilities exist than we might have thought before, and i know companies and financial institutions are putting a lot of resources into building defenses for those cyber threats. and i think those are all investments that are completely well spent. what we, i think, as government, as an administration have to make sure we do is that when we hear of nets, when we get credible -- threats, when we get credible information regarding threats, we should be in a position obviously not just to protect taxpayer information and financial information, but if it's relevant, be able to push it into the relevant institutions so that they are aware that their institution may be targeted and that they can then take strong steps to

actually act sort of proactively to minimize the chance that the threat has become something that's damaging. >> so what should the men and women in this room do when they go back to their office tomorrow? what's the first step they should take -- >> talk to your cio. make sure that your cio has a credible plan for dealing with cyber threats, cyber risks. have a good to sense that the cio is investing your company's money well in the use of cybersecurity mitigation techniques. make sure that the staffing of the ceo office is done appropriately, thatst reporting up to your boards in a way that gives your boards good visibility regarding potential threats, and headache sure that there are good -- make sure that there are good connections

between your cio offices and people this law enforcement. so that there are good, strong, credible sort of private/public links so that you've got good channels for receiving information that may be, that the government may be reffing. >> okay, so let's talk about another threat. we have a couple minutes before we get into question and answer with the cfos. the financial stability, so the consensus of a lot of economists who looked at the financial crisis as one of the main points of weaknesses in our financial system was shadow finance, money market mutual funds, for instance. they were prone to runs after lehman brothers collapsed. a lot of activity happening in the hedge fund university that people didn't understand. by some measures it looks like more activity is going into the shadow finance system, and very little has been done to reform the money market mutual fund

industry or triparty repo funding markets. so let me ask you a two-part question. one, do you see activity flowing into the shadow financial system? and does it trouble you? and what needs to be on top of the agenda for this administration to address the had doe financial system risks? >> so risks that are emanate emanating from triparty repo, from money market funds, i think those are all risks that we are aware of, that the administration through various agencies is working on proactively and is definitely thinking through how, you know, what kind of mitt gants can be put in place to keep these kinds of instability factors from

being able to transmit quickly through the system. >> you've been working on money funds for five years. >> well, not me personally, the sec is doing quite a bit of study on this, and we've got something, as you know, called the financial stability oversight council now which is a group that is chaired by treasury, but that consists of members of members of all the various regulatory agencies. and this is a governance device that, essentially, was put in place to actually ask the questions that you're asking and that market participants are asking which is where could the next risk come from. and to the extent that these risks exist outside the silos of the various regulators, what can this group, the fsoc, do collectively, in essence, to figure out how to reform or how to, in essence, deal with the

risks that might be existing in between the silos. i would say that the work of the fsoc is proceeding in a robust way, that it's an excellent device for actually discussing these risks, but ultimately you're right, i mean, in the sense that there will be individual regulators who have jurisdiction over particular areas of, you know, of the financial system, and it will be for them to determine, essentially, what reforms need to be put in place. >> is the sec moving fast enough? >> well, the sec is moving, we'll put it that way. [laughter] i don't know quite the pace at which it's moving. i know that they do take this issue also quite seriously. you'll remember that the fsoc did something in the mutual fund space called a 120 letter which, in essence, was a device by

which the regulators talked about as a group, essentially, what risks they foresaw in this space and tasked the sec, so to speak, to come up with something that would be, in essence, responsive. >> all right. so our clock is red and has a bunch of zeros on it. >> right. we're going to have a few minutes now for q&a. questions from the audience, i have some on the ipad. anything from the audience? yes, please. >> my question goes back to the -- >> you identify yourself? >> yeah. question goes back to the growth agenda and your optimism about growth. as you look into the future, what in your view can the government or treasury do to propel, you know, the growth going forward? you know? because growth has been slow and anemic, i think something that prized all of us, so love to hear your perspective. >> sos an excellent question,

and i think we have as a society, you know, we've made collective investments in particular areas that actually are, you know, make the u.s. a very attractive investment climate, but also they make the u.s. a real powerhouse for economic growth, and they fall into various categories. we have a strong, very strong infrastructure set of, you know, set of features in our country. i would say our human capital, and i would say our ability to innovate. and to the extent we can think of policy levers that are associated with each of those i would say potential growth engines, i think that would be kind of how i would think about, in essence, moving forward on a growth agenda. again, focusing on, you know, infrastructure, making sure our infrastructure is strong and

sturdy, dependable as it can, making sure we have space in our economy for innovation and experimentation and new development. and then our human capital, and i talked a little bit about that in the student loan space, also thinking about worker development, apprenticeship programs, things that are, in essence, doing more to enhance the human capital skill stets of our -- sets of our labor force. >> other questions? i'm going to go to the ipad. what's the process by which the administration seeks and gets input from companies to determine economic policy? >> so i can -- >> this is generally, he feels, ignored. >> all right. so in my experience i would say that a lot of input is

continuously sought by groups all across the board. so business groups, community groups, housing groups. i'm speaking mostly there my experience which is in the financial institution space but have always made it a habit and actually institutionalized in terms of our laws, in terms of administrative procedures where you actually seek out input very early in the policy making process. i would say the ability to actually capture as much of the ideas out there as possible before you actually sit down to, you know, to actually craft policy is critical to getting, to getting the policy making job done correctly. i view it as an extraordinarily high priority to always do that outreach in very early stages of policy making.

>> right. that's the financial sectorover the fed overseas. you're brand new to the treasury department, so this isn't fair, but i'm going to do it anyways. [laughter] other than the financial sector, companies here that are not in finance, how many of you have felt shah kind of vigorous outreach by the government on economic policy making? anybody? >> so finance is different because of the fed. >> because of the fed's role. let me ask you a different question -- >> although i can say no longer being at the fed, my attitude would transcend financial institutions. in order, it's not just financial institutions that i think that argument applies to. i mean, policy making in really any i dimension is -- >> we're leaving the the last minute of this discussion to take you live to the u.s. senate. at 5:30 eastern this afternoon, a series of votes scheduled on four federal district court

nominations. and later this week senators will take up a bipartisan job training bill. live now to the senate floor here on c-span2. the presiding officer: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. eternal god, who spreads the lightning against the dark clouds, your name is holy.